8/03/2012

When Power Breeds Deceit

It occurred to me, as I was reading about yet another government official trying to downplay the poor economic reports that came out recently, that governments have very strong incentives to lie about nearly everything these days. And that is because government is exerting power over nearly everything, and therefore we expect it to perform well at nearly everything.

Let me explain by way of an example. There once was a time when the government collected statistics about employment. This was necessary, because the government had taken on the role of stewarding economic growth, and therefore it needed to know when people were losing their jobs (and conversely, when “too many” people had jobs, which as everyone knew at the time would increase inflation). So the government wanted its statistics to be accurate, so that it could make good decisions based on them.

Over time, however, the government discovered that when it published bad employment numbers, the people blamed the government. Conversely, when the government published good employment numbers, the people praised the government. Never mind that the government had little control over day-to-day employment changes. Now, it is true that government policy can affect employment through tax rates, burdensome regulation, changes in inflation or trade policy, and the like. But let’s face it: that’s all hard stuff to change quickly, and you have to fight entrenched constituencies who like the policy as it is.

So, it was far easier to simply fudge the numbers to make them look good. In the US, this began in earnest in 1994, when “discouraged workers” (those who had stopped looking for work entirely) were simply excluded from the unemployment rate. Unfortunately, people accepted the new numbers uncritically, leading to major electoral dividends for the politicians in power (Democrat or Republican). Today, if you want to know the state of actual employment in this country, you have to turn to the Employment-Population Ratio, which is dismal right now. Oddly, the same government that publishes the misleading unemployment rate is also publishing the more accurate numbers in an obscure location, hoping that the mass of voters is not savvy enough to dig down.

Similar distortion of statistics occurs all the time, under all governments. This can be seen on a smaller scale as well. The Obama Administration forced Solyndra to delay laying off workers until after the 2010 elections. Was this good business? No, but it was good politics. Similarly, defense contractors are being pressured not to send out layoff notices just before the election (as the law requires them to do—given that the “sequestration cuts” of the defense budget are scheduled to come into effect on January 2). Why? Because the government was intimately involved in setting up the situation, and wants to escape blame.

Obviously, one could castigate the deceit of those involved and bemoan their hoodwinking of the American people—and feel free to do so. But let’s not miss the larger point. The government is induced to lie about the state of the world because it has asserted responsibility for the state of the world, and asserted power over the world. Therefore, we are apt to blame the government even for things outside of its control, such as hurricanes or earthquakes! Given the tremendous political gains for lying under these circumstances, and the undeserved costs of telling the truth, is it really surprising that politicians lie constantly?

There is only one solution: give up the belief that the entire world is government’s responsibility. Force the government to hand back much of its power, and it will have fewer reasons to lie to us. This is the choice we have: the more powerful our government, and the more responsibility we give it, the more it will deceive and deceive until finally it can deceive no more, and we all suffer the consequences of our mistaken beliefs about the world.